What did some of the industrial design team behind Microsoft's Xbox console, Kinect controller, Zune media player and the never-launched Courier tablet do next?

They founded a startup called FiftyThree and released an iPad app called Paper, as adept for touchscreen note-taking as for sketching and digital painting. One App of the Year prize from Apple, a $15m funding round and more than 8m downloads later, Fiftythree is releasing its first hardware product to go with Paper.

Full marks if you guessed it would be called Pencil. It's a smart (in both senses of the word) stylus that goes on sale today in North America from the company's own website, in a choice of walnut or graphite. It can be used as a stylus for any tablet app, but when paired with Paper via Bluetooth, it does more.

Paper was released in March 2012, but Fiftythree was already working on the Pencil to go with it according to co-founder Jonathan Harris, who heads the company's hardware design team.

"We've been using pen and paper for over a thousand years, and now we've entered this new digital age, we need to evolve. We have these beautiful iPads, but we're still working with this dead stick!" Harris told The Guardian, referring to existing stylus accessories.

"How can we make that experience so much richer? A lot of things from the analogue world are still lacking on the digital side, so we wanted to bring a nice solution of digital and analogue together, and build a really expressive tool."

Harris said that Pencil has been designed to have similar versatility to Paper, to be used for art and sketching, but also for writing. That includes its "friction-tuned" replaceable tip, which glides smoothly across the tablet screen.

John Ikeda, who heads hardware product management at Fiftythree, compared Pencil to the games that were core to the colleagues' previous jobs at Microsoft: easy to pick up and play, but with more depth for players who put in the time.

"Pencil as a tool should be intuitive, accessible and very easy to pick up and use. It should feel obvious. But as you progress and learn the intricacies of how to use it, you can definitely master it and create really technical things," said Ikeda.

Pencil is certainly easy to pick up and use, based on my experience with one this week. Rather than fiddle with buttons to pair it with your iPad, you press its nib to a button on-screen – "Kiss-to-Pair" is how Fiftythree describes this.

Why pair a stylus with a tablet? Partly for something called palm rejection: when Paper knows you're using Pencil, it ignores input from your palm resting on the touchscreen – something Harris said has been "the number one request" from Paper's creative users.

Pencil was designed to look like a carpenter's pencil.

Pairing Pencil and Paper also means you can flip the accessory over and use its eraser (yes, it has one) to rub things out without manually selecting the rubber tool on-screen. And while palms are rejected, fingers are welcome: when you're using Pencil, touching the screen with your fingers smudges lines and blends colours, just as they would on real paper.

"Pencil works great as a passive stylus, but passive styli are just an attempt to make a better finger. What's the point of that? A finger's awesome! If we're going to make a tool, let's make a tool that does things that a great tool does," said Ikeda.

"How is an analogue pencil more powerful than a finger? One: it allows you to erase. And two, you can still use your finger for what a finger is good for: what you learn to do as a child, which is to manipulate art."

The device's design was inspired by a carpenter's pencil according to Harris: flat and wider, which in that tool's case is partly to ensure it doesn't roll off a work-bench or roof. In Pencil's case, magnets in the walnut version help it attach to Apple's iPad covers.

There are, it's fair to say, plenty of people who'll take a more cynical view: why Paper and Pencil with devices costing hundreds of pounds (in total) rather than, well, paper and pencils? Or if you are using a tablet, just your fingers?

It's a question that Fiftythree fielded cheerfully. "Like we said, we're not trying to build a better finger: touch is great, and there is no tool better than the human hand. But there are things that tools can do to complement the human hand. We believe that Pencil is one of those things," said Harris.

"For us, for people to have a natural tool like a pencil to use is a no-brainer. The way we're raising this society, it doesn't feel natural to draw without a tool. What age do you start using crayons?"

Pencil isn't quite as cheap as a set of crayons: the graphite version costs $49.95 while the walnut version costs $59.95 – complete with sustainably-harvested wood that "we can source right down to tracking the stump that it came from" according to Harris.

"Just like the app, we're trying to take away the barriers to creation, and we didn't want price to one of those barriers," added Ikeda. "We're trying a price point where it's accessible to all the everyday creators, not just to the architects and the designers."